Starbucks stock retreated in heavy volume after a report suggested the coffee chain's growth may be losing some steam.» Read More
"What do you do when oil's over $130 a barrel, and the subprime-infected stocks are still plaguing the market?" asked David Sowerby of Loomis Sayles. "You go shopping!"
Sowerby urges investors to stay light on financials, especially among regional banks, and focus on technology and its abundant free cash flow.
"The market doesn't have a terribly...robust picture going forward, but nevertheless, compared to 4 percent yield on 10-year Treasurys, I think stocks have the opportunity to outperform that by 5 to 6 percent over the next nine months," he told CNBC.
But which stocks?
Sowerby likes watchmaker Fossil and beverage group Dr. Pepper Snapple.
His technology picks are Applied Materials, Corning, and Harris Corporation.
Lehman Brothers downgraded continental European stocks to "underweight" from "overweight," while raising U.S. equities to "overweight" from "underweight."
The brokerage cut its weighting in continental European stocks to 12 percent from 24 percent, saying, "An expectation of rate rises in the Euro area, coupled with a deteriorating unit labour cost position and an associated margin squeeze, suggest cutting exposure."
Earnings revisions strongly favour U.S. stocks at this point, Lehman said, adding U.S. non-financial stocks look cheaply priced relative to continental European peers.
It raised its weighting for U.S. equities to 52 percent from 42 percent.
If they were re-making "The Graduate," the word of advice whispered to the young man with the fresh diploma would probably be "infrastructure." That's the way John Derrick of U.S. Global Investors might see it, anyway.
His five-star fund is up an average of 14.48 percent per year over the last three years.
"China's infrastructure growth is phenomenal," he told CNBC. "The growing industrialization of China and...the emerging markets is leading to a rapid urbanization...and with that, you need the basic infrastructure of housing, electricity, water and sewer, transportation."
So where are the best plays in infrastructure?
"We've taken what we call a 'picks and shovels' approach," Derrick said. "We look at the building blocks, and I think that starts with steel. You can't have an infrastructure project without steel that's behind it -- so, for instance, U.S. Steel would be an excellent example there."
More picks and shovels?
"You can't have an infrastructure project without cranes to build the buildings, and the roads," he went on. "Manitowoc is a name there...Foster Wheeler, obviously, large, engineering-construction firm, really levered to the energy/LNG/power markets."
Big jumps for the unemployment rate and the oil prices on the same morning. Coincidence? Not likely, according to Christopher Zook.
"Crude oil, there's a tremendous imbalance right now in supply and demand, as well as the fact that you've got institutional buyers of the commodities trying to hedge out their portfolios against inflationary risk," the chairman and chief investment officer of CAZ Investments told CNBC. "The reality is, it's stagflation, it's coming, and we saw it this morning."
So where in the world should a stock-market investment put his money?
"The best idea right now would be Applied Materials," he said. "We believe there's a tremendous growth opportunity there in the solar business, as well as the economy begins to recover in 2009 and 2010, they're going to get strength in their core businesses as well."
Zook also likes Procter & Gamble and Genentech.
"Procter & Gamble we like because of the defensive nature and the consistent performance of that company in an uncertain environment," he said. "We also like Genentech right now because of the new indications that they're getting for their core drugs; we believe that the valuation is very reasonable for the amount of growth that you're getting in cash flow for that company."
Russel Kinnel, Morningstar director of fund research, appeared on CNBC's "Squawk on the Street" to recommend some mutual funds.
Pimco Total Return Fund
Vanguard Total Stock Market Fund
But he warned against two TIPS based funds:
Pimco Real Return A
Vanguard Inflation-Protected Securities
Click here to see his full interview.
It's a tough time for an investor to find the way to prosperity, but Doug Cliggott says it just might be found along the food chain.
He's also very specific about where prosperity is not likely to be found.
"Avoid areas where you need lots of credit growth to make it work," Dover Management's chief investment officer told CNBC.
So where can you go without worrying about credit growth?
"The extreme ends of the food chain," Cliggott said. "No pun intended. Wal-Mart, Costco, where you're going to go and buy it, because they just put a toll on everything that goes through the cash register.
"Then, I would focus on things like Deere, that are selling the farmers the equipment to be more productive."
A scuffed-up shoe company and a shining entertainment giant are unlikely companions in the good graces of John Buckingham, the chief portfolio manager of Al Frank Asset Management.
His four-star fund has earned an average of more than 15 percent per year for the last five years.
On the top of his list is trendy footwear maker Crocs.
"This is a stock down from 75 to single digits, because their earnings have fallen off a cliff, but they're still expected to earn $1.60 to $1.70 a share this year," he told CNBC. "Valuation-wise...Crocs is an excellent, undervalued stock, trading at six times earnings."
He admits the credibility of the company's management has been badly damaged -- but points out that international sales have recently risen as much as 80 percent.
Buckingham also likes the Walt Disney Company.
Disney is now trading around 15 times earnings; they continue to beat expectations, and last quarter they had fantastic numbers," he said.
"Here's a company that is the premier media play out there...gas prices are so high, it's kept a lot of people at home, and the weak dollar has brought a lot of people to the theme parks here in the U.S."
Bernie McGinn thinks it's time for the investor to make a deposit in some selected bank stocks. The founder of McGinn Investment Management thinks the subprime crisis has now run its course.
"The subprime story has now been around almost a full year, giving people and companies time to adjust their exposure and to adjust their valuations on securities, and I think that to a certain extent, companies have started to overcompensate for their exposure to subprime," he told CNBC.
"In the financials, I think there's a buying opportunity at AIG," McGinn said. "That's a company that has been sort of pummeled of late, because of management issues."
He also likes Bank of America.
"Bank of America represents a pretty good buy right here," he said. "It's a tremendous franchise; it's the number one in deposits, it's number one in credit-card balances, it will be number one in mortgages."
Also on his shopping list are Home Depot and FordMotor.
Disclosure information for Bernie McGinn was not immediately available.
Lehman Bros. is not going out of business, suggests Dennis Gartman, professsional speculator and founder of The Gartman Letter. Nevertheless, he is short on banks generally, because he doesn't think there is a good environment for them right now.
With high diesel-fuel prices putting the squeeze on trucking, what if you could take a lot of trailers, hook them all together, and haul them with one truck? Well, you can, sort of. It's called a train, and the situation has kept shares of railroad companies in the green for quite a while now.
Kevin Kirkeby of Standard and Poor's, and Lee Klaskow of Longbow Research told CNBC which railroad stocks top their lists.
Both analysts like Norfolk Southern.
"In the near term, we see they've got several coal mines from their customers coming on, and they've been investing heavily with an eye to the longer term, to open up some corridors into the interior, to take advantage of more container volume coming into the East Coast," Kirkeby said.
"For us, NSC is really the only true value that's left in the market," Klaskow added. "What's really holding this stock back...it has a large exposure to the auto industry."
Kirkeby's second pick is Canadian National, which not only has an extensive rail network north of the border, but operates several freight lines in the United States as well.
"You have to ask yourself, 'What else could go wrong with this company?'" he said. "You look at first quarter, you had weather, you had currency, plant shutdowns...it's lagged its peers, its valuations are at a discount, any good news coming out of its end markets should benefit that stock."
Klaskow favors Burlington Northern Santa Fe.
"What BNI has, and what it does really well, is it has a large exposure to more defensive commodity types," he said. "Seventy-two percent of its assets are tied to coal, ag(riculture), or intermodal."